When we think of well-being, we often limit ourselves to our physical and mental health. A 2018 survey by Northwestern Mutual revealed that 44% of respondents listed money as their number one source of stress. To ensure your mental health, it’s important to consider your financial well-being.
In January 2015, the Consumer Financial Protection Bureau published a report on how people acquire financial capability. During their research, they asked participants to define financial well-being. The answers they received weren’t numbers – checking account balances, net worth, or IRA growth.
We all value different things so account balances and net income won’t capture the full picture. Instead, how people defined financial well-being was based more on emotions than hard and fast numbers.
The results suggested that financial well-being was a state in which people felt they:
- had control over their daily and monthly finances
- had the ability to handle a financial shock
- were on track to meet financial goals
- had the financial freedom to enjoy life
As Daily Money Managers, our focus is on organizing our clients’ finances and helping them feel in control of their daily and monthly finances. We help our clients live within their means, set realistic goals, and make informed and strategic financial decisions. But we don’t work alone. Our clients have a team of people – daily money managers, financial advisors, insurance agents, attorneys, and accountants – all working to ensure their financial well-being.
How do you reach financial well-being? The CFPB research showed that certain behaviors and skills, which they labeled as “financial capability”, supported financial well-being. Over the next few weeks, we’ll take a look at these behaviors and skills.
Money may be a significant stressor for many Americans, but with a solid understanding of the questions to ask and actions to take, you can achieve financial well-being.